Question

for each product you must decide on a sales forecast (being the number of units you believe you will sell next year) and a production quantity decision (being the number of units you need to produce to meet your sales forecast). in what circumstances would your production quantity be less than your sales forecast?

Answer 1

A firm's production quantity may be less than its sales forecast in certain circumstances. One reason is if the firm anticipates a decrease in demand, and another reason is to maintain scarcity and increase product value.

Step-by-step explanation:

In some circumstances, a firm's production quantity may be less than its sales forecast.

One possible reason is if the firm is anticipating a decrease in demand for the product. For example, if the firm expects a decrease in consumer interest or a shift in market preferences, it may decide to produce fewer units to avoid excess inventory.

Another circumstance is when the firm wants to maintain scarcity and increase product value. By producing fewer units than the sales forecast, the firm can create a perception of limited availability, which may increase demand and allow for higher prices.